According to a recent study, a majority of American teens don’t know basic life skills, and this includes managing money. The research reveals that 87% of teens admit that theydon’t know much about personal finance, and while they do want to learn, they don’t have the tools that they need to know more about the matter. Our parents or guardians are our best resources for financial knowledge, and it’s never too early to learn how to be financially savvy. Apart from having enough money in the bank, learning how to keep our finances in order can benefit us in other ways. Here are all the reasons why you should learn how to manage your money and learn more about finances.
Having a good financial record can help you qualify for a loan
Most teenagers may take on side jobs or borrow money from their parents if they need extra money. However, having a good financial record qualifies you to get a loan and enables you to have the funds that you need for tuition fees, your first car purchase, or a startup for a small business. Asseen in this Finnish example, 18-year-olds can loan as much as 2,000 Euros or about $2,300. In the US, you will need to have a good credit score, an income, and acollateral such as a houseor a car before you can get approved for most loans.
It allows you to be more independent
Having a savings account and a good financial record allows you to be more independent. You can purchase items or experiences, such as a vacation, on your own, and you don’t need to rely on anyone to fund your needs.Having basic financial skillssuch as balancing a checkbook, investing, and managing your credit card can all lead to the road to independence.
You learn to prioritize and make good financial choices
Learning how to manage your money while you’re still young enables you to prioritize your spending. Knowing the basics of money management, such as making a budget, already puts you ahead of most college students as studies have shown that around40% of the typical college student’s budgetgoes to purchases like clothes, entertainment, snacks, and gadgets. This is why most students find that they’ve gone through most of their budget even before the semester is over. But having a budget in mind is the step in the right direction as you get to prioritize your main expenses first and still have some money left over for savings and incidentals.
Being on top of your budget, having discipline, and brushing up on your life skills and financial know-how can all help to give you more security in the future. Learn as much as you can about your managing your money while you’re young, and set yourself up for financial success.